In short, free up the banks all you like; today, in the U.S., they will continue to receive and pay fiat Federal Reserve dollars, so long as no steps are taken to actually demonetize such dollars. Banks might, of course, also offer notes and deposits denominated in other less popular but still well-established currencies; and a few might even offer gold accounts and notes. But such non-dollar bank monies will be but tiny sideshows compared to the main act. And it will be a rare bank indeed that dares to enter the base-money-creation business, the rest remaining content to leave that business to central banks.
Selgin on the need for central banks.
But he is not getting NGDP growth standard from that.
Central banks cannot run an S/L and engage in NGDP growth automatically; they will be hedged, and they cannot counter hedge. George and his crew of NGDP plotters need the Treasury inflation tax. If they do not get that, then they get what we have, bank taxes determined by unelected fiat, and that has never lasted.
What we have left is the monopoly tax dollar. And his recommendation to free banking is simply the act of opening up the Swift technology for free entry and exit. We already have free banking for other currencies, Swift is the laggard.
Once we negotiate a Treasury tax, then what is left for the Central Bank? It has no other roll than head of the free Swift network. The actual base money happens via double spending, there is no role left for central banks except to enforce free banking.
We have a chart that is outside our Overton window and we cannot look at that chart. I will tell you what the chart says. The central bank follows the one year treasury, always, so that government stays liquid. That chart alone tells me that NGDP targeting by central banks is unworkable. Someone will look at that chart, some one brave, and the game will be over. It is an inflation tax we need, a double spending role for Treasury.
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